INSIGHTS ON PBS HAWAII: What is the Future for Hawaii’s Largest Power Utility?

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>>DARYL: COMING UP NEXT ON INSIGHTS ON PBS HAWAII, WHAT IS THE FUTURE FOR HAWAI'I'S LARGEST POWER UTILITY? [INTRO MUSIC] >>DARYL: ALOHA AND WELCOME TO INSIGHTS ON PBS HAWAII. I'M DARYL HUFF OF HAWAII NEWS NOW. THE PUBLIC UTILITIES COMMISSION IS CONSIDERING A $4.3 BILLION DOLLAR PROPOSAL TO MERGE THE HAWAIIAN ELECTRIC COMPANIES WITH FLORIDA BASED NEXTERA ENERGY. THE PROSPECTIVE PARTNERS SAY THE DEAL WILL CREATE A MORE AFFORDABLE CLEAN ENERGY FUTURE IN HAWAI'I. NOT EVERYBODY IS CONVINCED. CRITICS SAY THEY SUSPECT NEXTERA IS NOT VESTED THE IN THE STATE'S CLEAN ENERGY GOALS AND HAVING ITS BOARD OF DIRECTORS BASED ON THE OTHER SIDE OF THE COUNTRY IS NOT IN HAWAI'I'S BEST INTEREST.

SOME CRITICS SUGGEST CONSUMER OWNED UTILITY COOPERATIVES OR MUNICIPAL UTILITIES MIGHT BE BETTER OPTIONS. TONIGHT, WHAT IS THE FUTURE FOR HAWAI'I'S LARGEST POWER UTILITY? WE WANT TO HEAR FROM YOU DURING TONIGHT'S CONVERSATION. >> CALL 973-1000 IF YOU LIVE ON OAHU OR 800-238-4847 IF YOU'RE CALLING FROM A NEIGHBOR ISLAND. YOU CAN ALSO WATCH INSIGHTS STREAMED LIVE AT PBSHAWAII.ORG. CLICK ON THE TITLE OF TONIGHT'S SHOW. OR FIND US ON TWITTER @PBSHAWAI'I. NOW, TO OUR PANEL. ALAN OSHIMA IS PRESIDENT AND CEO OF HAWAIIAN ELECTRIC COMPANY, SUBSIDIARY OF HEI WHICH PROVIDES ELECTRICAL SERVICE ON OAHU. MAUI AND BIG ISLAND. IN JUNE, INVESTORS HOLDING ABOUT 90% OF THE HEI SHARE VOTED TO MERGE WITH THE NEXTERA ENERGY. GLEASON HE HAS RECOMMENDED THAT'S PUB PUBLIC UTILITIES COMMISSION REJECT THE NEXTERA HAWAIIAN ELECTRIC MERGER HAS PROPOSED.

ERIC GLEASON IS THE PRESIDENT OF NEXTERA ENERGY HAWAI'I AND LEADS ALL OPERATIONS RELATED TO THE PROPOSED MERGER. NEXTERA ENERGY RECENTLY REVISED ITS ORIGINAL PROPOSAL BY ADDING MORE THAN 50 NEW BINDING COMMITMENTS TO ADDRESS CONCERNS REGARDING THE PLANNED PARTNERSHIP. AND REPRESENTATIVE CHRIS LEE IS CHAIRMAN OF THE HOUSE COMMITTEE ON ENERGY AND ENVIRONMENTAL PROTECTION. REPRESENTATIVE LEE IS EXPRESSED STRONG CONCERNS ABOUT THE MERGER BETWEEN NEXTERA ENERGY AND HAWAIIAN ELECTRIC AND SUGGESTED LOOKING AT PUBLICLY OWNED UTILITIES AS AN ALTERNATIVE. GOVERNOR DAVID IGE PLANNED TO JOIN US BUT WITHDREW. HIS OFFICE SAID IT WOULD BE INAPPROPRIATE FOR THEM COMMENT BECAUSE THE MERGER PLAN IS STILL BENDING BEFORE THE PUBLIC UTILITIES COMMISSION. GOVERNOR IGE HAS COME OUT AGAINST THE MERGER.

WHY DID YOU DECIDE TO SELL OFF THIS COMPANY? >> I DIDN'T DECIDE TO SELL OFF. THE BOARD OF DIRECTORS HAD A DUTY TO EVALUATE AN OFFER. IT HAS A FIDUCIARY OBLIGATION TO SHARE HOLDERS TO EVALUATE OFFERS, LEGITIMATE OFFERS TO PURCHASE. SO IT REALLY LOOKED HARD AT THAT OFFER. ONCE IT CAME TO TERMS THAT THE OFFER WAS REASONABLE, THEN IT LOOKED OTHER THINGS, LIKE COMMUNITY EMPLOYEES AND REALLY EVALUATE WHETHER THIS WOULD BE A GOOD FIT CULTURALLY FOR HAWAI'I. >>DARYL: WHY THE SALE? WHY WAS IT NECESSARY TO SELL IN. >> IT'S NOT NECESSARY TO SELL. IN THE TRUE, I MEAN, IF IT WERE GOING TO BE THE UTILITY OF THE PAST, WE COULD CONTINUE ON. WE ARE FACED IN HAWAI'I WITH PROBABLY THE MOST AGGRESSIVE PLANS TO REACH 100% RENEWABLE FUTURE AND WE'RE ALIGNED WITH THAT. I THINK WHAT NEXTERA BRINGS TO US, I SAID THIS PUBLICLY, NOT ONLY CULTURALLY DO WE FIT WITH THE WAY THEY OPERATE, WE'RE TRYING TO BECOME MORE LIKE THEM AS A UTILITY. BUT WE ALSO NEED THEIR PURCHASING POWER, THEIR GREATER ACCESS TO CHEAPER MONEY, TO FUND THE INVESTMENTS WE HAVE DO, AND THEN THEIR TECHNOLOGY.

ALL OF THOSE THINGS WILL HELP US GET TO THE 100% RENEWABLE IN A BETTER WAY. >>DARYL: JEFFREY ONO CONSUMER ADVOCATE. WHY DID YOU FOLKS COME OUT AGAINST THIS AND PRIOR TO THE MERGER, WERE THEY DOING A GOOD JOB IN TERMS OF CONTROL OF RATES AND RELIABILITY? >> LET ME ANSWER THE FIRST QUESTION FIRST. SO WE HAVE RECOMMENDED TO THE PUC TO REJECT THIS TRANSACTION, AND THE REASON IS THAT WE FEEL THAT THERE ARE INSUFFICIENT BENEFITS TO CONSUMERS ESPECIALLY WHEN YOU PUT THAT IN, IN THE LIGHT OF $1.4 BILLION SHARE OLDER PREMIUM. WHAT THEY'RE OFFERING TO CONSUMERS IS JUST INSUFFICIENT. WE BELIEVE THAT THE STANDARD OF REVIEW SHOULD BE THAT THERE NEEDS TO BE SUBSTANTIAL NET BENEFITS TO CONSUMERS IN ORDER FOR THE PUC TO SAY THAT THIS IS IS REALLY IN THE PUBLIC INTEREST. >>DARYL: LET ME ASK SOME OF YOU. I THINK OUR AUDIENCE ARE NOT MADE UP OF FINANCIERS SO WHEN YOU TALK ABOUT A $1.

4 BILLION SHARE OLDER PREMIUM, IS THAT WHAT YOU SAID? >> YES. >>DARYL: THEN YOU COMPARE THAT, IS THIS A DOLLAR FIGURE THING, WHERE YOU'RE LOOKING FOR HOW MUCH MONEY IS IT GOING TO GO TO THE CONSUMERS? >> THE $1.4 BILLION PREMIUM IS MEASURED AT THE TIME THE TRANSACTION WAS ANNOUNCED. THAT'S DECEMBER 3RD, I BELIEVE, 2014. SO COMPARISON OF WHAT THE HEI STOCK PRICE WAS AND WHAT THE OFFER WAS FROM NEXTERA AT THAT TIME. >>DARYL: OKAY, SO STOCKHOLDER FOR BASICALLY OFFERED BASICALLY $1.4 BILLION TO LET THEIR STOCK GO? >> THEY WERE OFFERED $4.3 BILLION FOR THE ENTIRE DEAL. SO VALUE OF THE HAWAIIAN ELECTRIC COMPANY WOULD BE 4.3 MINUS THE $1.4 BILLION PREMIUM FOR THE SHAREHOLDERS. THAT'S THE WAY NEXTERA HAD RESPONDED TO INFORMATION REQUESTS THAT HAD BEEN SUBMITTED BY, I BELIEVE DEPARTMENT OF DEFENSE.

THAT NUMBER, 1.4 BILLION, COMES FROM NEXTERA THEMSELF IT'S. >>DARYL: WE'LL GO LITTLE BIT MORE INTO THAT LATER ON. ERIC GLEASON FROM NEXTERA, MR. ONO IS ONE OF A WHOLE ARRAY OF PEOPLE WHO'S COME OUT AGAINST THIS DEAL EXCEPT FOR THE UNION THIS WEEK. YOU PRETTY MUCH HAVE NOT GONE ANYBODY WHO'S COME IN EQUIVOCALLY IN FAVOR. WHAT WOULD THIS DEAL ACCOMPLISH WITH THAT KIND OF OPPOSITION AND WHAT'S YOUR STRATEGY MOVINGING AHEAD? >> FIRST, IT'S ACTUALLY EARLY IN THE PROCESS. MAYBE IT'S HALFWAY IN THE PROCESS. YOU KNOW, IT STARTED WITH OUR APPLICATION IN JANUARY, AND WE ARE NOW THROUGH SERIES OF TESTIMONIES, SEVEN ROUNDS OF TESTIMONY FROM BETWEEN ALL THE PARTIES. WE'RE MOST OF THE WAY THROUGH THE LISTENING SESSIONS, PUC LISTENING SESSIONS, LAST ONE IS HERE ON OAHU NEXT WEEK. THERE'S GOING TO BE A HEARING STARTING NOVEMBER 30TH AND GOING THROUGH DECEMBER, POTENTIALLY BEYOND THAT. PROBABLY CLOSING ARGUMENTS FROM THERE. AND THEN THE COMMISSION HAS GOT TO MAKE THE DECISION. WE HAVE THREE COMMISSIONERS WHO NEED TO MAKE THE DECISION BASED ON THE RECORD BEFORE THEM.

AND SO THERE'S TIME TO CONTINUE THE DISCUSSION. AND AS PART OF THAT, LISTENING. GOING AROUND THE STATE AND MEETING WITH PEOPLE, LISTENING TO THE VIEWS OF FOLKS AROUND THE STATE. BUT ALSO, ENGAGING WITH CONSUMER ADVOCATE WHO WE HAVE A GREAT RESPECT FOR JEFF AND HIS POSITIONS AT THE SAME TIME. THE OTHER INTERVENERS. AND WE'RE TRYING TO FIND COMMON GROUND. SO YOU MENTIONED MORE THAN 50 ADDITIONAL COMMITMENTMENTS THAT WE INTRODUCED IN AUGUST. THAT'S REALLY INDICATIVE OF OUR APPROACH. WE'RE TRYING TO UNDERSTAND THE CONCERNS PEOPLE HAVE AND TRYING TO MEET THOSE CONCERNS AS BEST WE CAN. >>DARYL: CHRIS LEE, REPRESENTATIVE AND CHAIRMAN OF THE ENERGY COMMITTEE AND THE STATE HOUSE. YOU HEARD MR. OSHIMA SAY THEY PRETTILY DESPERATELY NEEDED INFUSION OF MONEY IN ORDER TO MODERNIZE AND IMPROVE THIS GRID. ISN'T THIS A GOOD THING?, SOMETHING TO BE SUPPORTED? >> DEPENDS HOW YOU LOOK AT IT. WHERE WE WANT TO GO AS A SOCIETY. LET ME BACK UP FOR A SECOND.

TO PUT THIS SORT OF ALL IN CONTEXT FOR THE AVERAGE PERSON. >>DARYL: HIGH LEVEL, I KNOW. I FIND MYSELF QUITE CONFUSED SOMETIMES. I'LL CONFESS THAT. >> I THINK PEOPLE HERE WANT TO BE ENGAGED IN THE STATE. I THINK WE HAVE A POPULATION THAT IS ABOVE AVERAGE. AND FOLKS I THINK ADJUST THIS STUFF. WE HAVE PROBABLY ONCE NAY LIFETIME DECISION THAT'S BEING MADE HERE. PROBABLY THE SINGLE BIGGEST DECISION MADE IN HAWAI'I'S MODERN HISTORY AND PROBABLY GOING TO HAVE DECADES OF POTENTIAL CONSEQUENCES ONE WAY OR THE OTHER THAT WE HAVE TO REALLY DEAL WITH. THAT THAT'S SOMETHING THAT I THINK PEOPLE REALLY HAVE A LITTLE BIT OF ANXIETY ABOUT. I THINK THAT'S WHAT IS GENERATING A LOT OF THE CONCERN OUT THERE. ALL THE POLLS TO DATE HAVE SHINNYO-EN PRETTY OVERWHELMING OPERATION SO FAR. AND I THINK THAT'S SOMETHING THAT NEEDS TO BE CAREFULLY, I THINK, THE HEARD BY NEXTERA AND HECO AND PERHAPS MORE OUTREACH WHICH I THINK THEY'RE TRYING TO DO. PUBLIC REALLY WANTS FOUR THINGS OUT OF THIS. THEY WANT CHEAPER RATES, RENEWABLE ENERGY, ABILITY TO GENERATE THEIR OWN POWER AND MOST OF ALL, THEY WANT ACCOUNTABILITY WITH THE UTILITY.

MY AUNTY ACTUALLY, WHO INCESSANTLY TEXTS ME THERE. SEARCHING FOR UPDATES. SAID MULTIPLE TIMES. BIGGEST THING FOR HER OVER THE YEARS, SEEN HER UTILITY BILLS GO UP AND UNLIKE A LOT OF PEOPLE FEEL THAT FRUSTRATION. MOST OF ALL FOR HER, FRUSTRATION SHE HAS NO SAY DECISIONS UTILITY MAKES THAT DETERMINES HOW FAST THE RATES RIGHT. >>DARYL: ALAN OSHIMA, I'LL GIVE YOU TAKING CHANCE TO RESPOND TO THAT. WE ALL FELT OUR RATES GO UP. SOMETIMES WHEN THE WIND BLOWS, POWER GOES UP. >> LET ME GET TO THAT RIGHT WAY. SAW IN THE PAPER TODAY WHERE OUR RATES IN THE LOWEST IN MANY, MANY YEARS. ARRANGE RESIDENTIAL RATE IS ABOUT $137 RIGHT NOW FOR 5 HINN KILOWATT HOURS OF USAGE. WHAT WE'VE SEEN IS ACTUALLY A GREAT DECLINE IN RATES OVER THE LAST NINE TO 10 MONTHS. >>DARYL: IS THAT JUST — >> WE DON'T GET CREDIT FOR HOLDING OUR OPERATIONS AT A PRETTY LEVEL RATE. THE FLUCTUATION IN RATES ARE DUE TO OIL. GET OFF OF OIL, STABLE PLATFORM FOR RATES IS WHAT WE'RE AFTER.

WE HAVE TO MOVE TO RENEWABLES WITH TECHNOLOGY, WE'LL GET A LOWER RATE. IT WON'T HAPPEN INSTANTANEOUSLY. I ALSO WANT TO MENTION I HAVE GREAT RESPECT FOR JEFF. WE'VE KNOWN EACH OTHER A WHILE. SUBSTANTIAL NET BENEFIT TEST HAS NEVER REALLY BEEN THE TEST. THAT'S BEEN APPROVED BY THIS COMMISSION IN ANY OF TRANSACTIONS. THE TEST. BY STATUTE, MADE CERTAIN STANDARDS. THIS IS HIGHLY REGULATED INDUSTRY. >>DARYL: I WANT TO ASK, CAN YOU USE LAYMAN'S TERMS TO EXPLAIN THAT TO ME? >> SUBSTANTIAL NET BENEFIT, YOU'RE LOOKING FOR A DOLLAR TO BE PAID EQUIVALENCY TO YOUR CUSTOMERS. IN THE KNOWN HAR TEST, ARE YOU MEETING ALL OF THE STANDARDS TO RUN THE UTILITY IN A WAY THAT MEETS ALL OF THE PUBLIC REQUIREMENTS. ARE YOU FIT, WILLING AND ABLE AND ARE YOU GOING TO RUN IT IN A CUSTOMER SENSITIVE WAY, BASICALLY AND SUPPORT THE COMMUNITY. THOSE ARE THE TESTS.

IT'S KNOWN AS HARVEST, YOU'RE NOT GOING TO BE ANY WORSE. I HATE TO SAY THAT, THAN THE UTILITY. IT'S NOT A SUBSTANTIAL NET BENEFIT TEST. HOWEVER, I THINK WHAT NEXTERA HAS DONE, TO SAY THERE ARE SUBSTANTIAL NET BENEFITS IN WHAT THEY'RE PROPOSING. >>DARYL: JEFF THAT WAS DIRECTED AT YOU. HAVE THE REGULATORS CHANGED THE RULES HERE TO SET A HIGHER STANDARD THAN YOU MIGHT HAVE SET FOR SOME OTHER COMPANY? >> NO. THE CONSUMER ADVOCATE HAS ALWAYS PUSHED FOR THE SUBSTANTIAL NET BENEFIT TEST ON ANY TYPE OF UTILITY MERGER. WHAT'S HAPPENED IN THE PAST IS WE'VE ARRIVED AT SETTLEMENT AGREEMENTS WITH THE MERGING COMPANY. AND SO WHAT'S HAPPENED IS THAT WE'VE GOTTEN THOSE SUBSTANTIAL NET BENEFITS IN OUR SETTLEMENT AGREEMENTS AND SO THE PUBLIC UTILITIES COMMISSION HAS NOT ACTUALLY GOTTEN TO THAT QUESTION. THEY'VE SAID, WE DON'T NEED TO ANSWER THAT QUESTION WHETHER IT'S A NO HARM OR SUBSTANTIAL NET BENEFIT TEST. BECAUSE OF A SETTLEMENT AGREEMENT. >> THAT WAS THE ATTORNEY FOR MANY OF THOSE MERGERS. I JUST WANT THE RECORD TO REFLECT WHAT THE STATUS OF THE LAW IS.

I COMMEND THEM WE'RE TRYING TO DO THAT. SETTLEMENT IS CAN RESULT IN THAT, BUT IT IS NOT THE CURRENT STANDARD THAT'S APPLIED. >>DARYL: REAL QUICK. I WANTED TO CHIME IN ON THE EARLIER CONVERSATION WHICH IS I THINK PART OF THE FRUSTRATION. EVEN THOUGH FUEL PRICES GO UP AND DOWN, AND THAT DICTATES A LOT OF THE SMALL FLUCTUATIONS IN PRICE THAT PEOPLE FEEL. A LOT OF THE CONCERN WEAR HEARING FROM THE PUBLIC, OVER THE LAST DECADE, BROAD TREND, UTILITY PRICES HAVE GONE UP ABOUT 80% HERE AT HECO. REAL CONCERN IS THAT UTILITY PROFITS HAVE GONE UP 90 SOMETHING PERCENT ROUGHLY. PART OF THE DISTRICT CONNECT BECAUSE WHEN YOU ASK WHERE WE'RE GOING, THAT WILL ALL FACTORS INTO WHAT SORT OF POLICIES, WHAT SO THE OF INFRASTRUCTURE INVESTMENT BEING MADE THAT DETERMINE WHAT PRICES ARE BEING SET FOR RATE PAYORS.

>>DARYL: LET ME — GO AHEAD. I WANT TO MAKE SURE. WE ARE GIVEN A RETURN ON EQUITY THAT WE HAVE THE OPPORTUNITY TO EARN. OVER THE LAST 10 YEARS, WE HAVE VERY, RARELY RETURNED WHAT WE ARE ALLOWED TO RETURN. SO IT'S NOT ABOUT THE PROFITS. WE ARE REGULATED. WE'RE GIVEN THE OPPORTUNITY BY THE CONSTITUTION TO BE ABLE TO EARN THAT. SO THAT WE CAN ATTRACT CAPITAL TO DO THE HEAVY INVESTMENT THAT'S NEEDED BY ANY UTILITY DESPITE OWNERSHIP. YOU NEED CAPITAL. IT'S A CAPITAL INTENSIVE BUSINESS. >>DARYL: LET ME GIVE ERIC GLEASON FROM NEXT A CHANCE. GONE AROUND THE TABLE ONCE. I WANT TO MAKE SURE, ANYTHING YOU WANT TO RESPOND TO? I WOULD LIKE TO KNOW, IN LAYMAN'S TERMS, WHAT IS IT YOU BRING TO HAWAI'I THAT COULD NOT BE BROUGHT BY SOME OTHER COMPANY OR THROUGH SOME OTHER ARRANGEMENT? >> WELL, I THINK THERE REALLY IS NO OTHER COMPANY THAT I'M AWARE OF THAT HAS THREE THINGS THAT WE BRING. ONE IS HISTORY OF ACTUALLY GETTING OFF OF OIL.

SO WE USED TO BE THE LARGEST BURNER OF OIL IN THE U.S. OF ANY POWER COMPANY. AS RECENTLY AS 2002, WE BURN 40 MILLION BARRELS OF OIL A YEAR. IT'S REALLY A DE MINIMIS AMOUNT AS WE SIT HERE TODAY. HAWAIIAN ELECTRIC COMPANIES BURN AS MUCH OIL FOR POWER GENERATION AS THE REST OF THE COUNTRY COMBINED. WE HAVE EXPERIENCE IN GETTING OFF OF OIL THAT I THINK IS UNIQUE. SECOND THING WE BRING IS UNIQUE EXPERIENCE BASE IN RENEWABLE ENERGY. WE'VE SEEN REALLY STARTING FROM SCRATCH OVER THE LAST 20 OR SO YEARS. WE BUILT UP THE LARGEST RENEWABLE ENERGY BUSINESS IN THE WORLD IN TERMS OF THE WIND AN SUN. AND THE THIRD THING WE BRING IS VERY STRONG BALANCE SHEET. ALAN MENTIONED THE IMPORTANCE OF CAPITAL I INVESTMENT. I THINK HAWAI'I IS GOING TO NEED UTILITY WITH US, MANY BILLIONS OF DOLLARS IN THE COMING DECADES IN ORDER TO COMPLETE THIS TRANSFORMATION AND GET TO 100% RENEWABLES.

WE HAVE A STRONG BALANCE SHEET AND AVAILABILITY OF CAPITAL TO DO THAT. >>DARYL: JEFFREY ONO CONSUMER ADVOCATE DOES THAT ANSWER THE QUESTION? HOW MUCH BENEFIT DO WE GET? >> THAT'S NOT SUFFICIENT. ONE OF THE THINGS ERIC DIDN'T MENTION IS FLORIDA POWER AND LIGHT HAS VERY RELIABLE SERVICE. WE EXPECT THAT FROM THEM IN HAWAI'I AS WELL. SO THAT'S ONE OF THE THINGS WE'RE ASKING FOR. GIVE US THAT LEVEL OF RELIABILITY IN YOUR SERVICE AS MEASURED BY THE STANDARD METRICS IN THE INDUSTRY. AND GIVE IT TO US RIGHT AWAY. THE SAME WITH THE BENEFITS THAT THEY'VE BEEN TALKING ABOUT. WE'RE ASKING THAT THESE BENEFITS, THE SAVINGS THAT NEXTERA SAYS THEY CAN DELIVER BECAUSE OF THEIR ACCESS TO CAPITAL, BECAUSE THEY SAY THEY CAN DO THINGS A LOT CHEAPER THAN HAWAIIAN ELECTRIC CAN DO THEM, GIVE IF TO US ON DAY ONE. DAY ONE OF THE MERGER, WE SHOULD BE ENITED TO SEE THOSE BENEFITS, GIVEN TO CONSUMERS.

>>DARYL: LET ME ASK, I WANT TO START TO PAY SOME ATTENTION TO THE PILE OF QUESTIONS WE'VE BEEN GETTING. YOU GUYS HAVE BEEN WATCHING THE PILE BUILD UP REALLY FAST. THANK YOU FOR HOSTING A HECO NEXT MERGER. WASTING CONSUMER MONEY. WHAT IS NEXTERA GOING TO DO DIFFERENTLY FROM HECO AND IN WHAT TIME FRAME? FOCUS THIS QUESTION ON WHAT IS THE SAVINGS TO CONSUMERS THAT YOU FOLKS ARE PROMISING, ERIC? >> THERE'S WHAT WE'RE PRESIDENT PROMISING AND ESTIMATING. SECOND NUMBER IS BIGGER AND I'LL HE EXPLAIN WHY. WE'RE PROMISING $60 MILLION OVER A FOUR-YEAR PERIOD. WE'RE ESTIMATING ADDITIONAL 405 MILLION OVER THE FIRST FIVE YEARS AFTER THE MERGER IS COMPLETED. REASON FOR THE DIFFERENCE IS BASICALLY, THE UTILITY BUSINESS IS A BUSINESS WHERE YOU PASS ON YOUR REASONABLE COSTS PROVIDING ELECTRICTY SERVICE TO CUSTOMERS.

AND SO IF WE CAN FIND WAYS TO REDUCE THE COST AND PROVIDING THAT SERVICE, WE BELIEVE WE CAN, WE BELIEVE WE'RE DEMONSTRATING THAT AND WE CAN HAVE A DISCUSSION WITH JEFF ABOUT HOW ADEQUATELY WE'RE DEMONSTRATING THAT. WE BELIEVE WE'RE GOING TO BE ABLE TO SAVE CUSTOMERS MONEY. >>DARYL: HOW DOES 60 MILLION TRANSLATE INTO A RATE? >> SO WELL, I CAN TELL YOU OFF THE TOP OF MY HEAD. 465 TOTAL, WHICH IS THE 60 COMING OUT OF OUR POCKETS AND THE 405 THAT WE'RE ESTIMATING IN TERMS OF COST SAVINGS PASSED THROUGHOUT THE CUSTOMERS. >>DARYL: OVER FIVE YEARS? >> OVER FIVE YEARS. 465. WHEN YOU DIVIDE IT BY ALL THE CUSTOMERS AND YOU TAKE ACCOUNT SMALL CUSTOMERS, LARGE CUSTOMERS TAKE IT DOWN TO THE TYPICAL HOUSEHOLD, ABOUT $400 IN TOTAL SAVINGS ESTIMATES OVER THE FIRST FIVE YEARS.

>>DARYL: DOES THAT TRANSLATE INTO A KILOWATT HOUR RATE? RIGHT NOW WE'RE PAYING THREE TIMES THE NATIONAL RATE THE. >> I DON'T REMEMBER WHAT IT TRANSLATES AS OF RIGHT NOW, WE'RE ABOUT 25 CENTS AND CHANGE. IT'S NOT REALLY THREE TIMES. BUT WHERE YOU'RE GETTING, I THINK YOU ALSO HAVE TO COMPARE IT TO WHAT THE RATES WILL BE AS WE MAKE SUBSTANTIAL INVESTMENTS IN SMART GRID. TO TAKE MORE RENEWABLE, IT'S NOT A VERY BLACK OR WHITE SITUATION. THERE'S A LOT OF INVESTMENTS THAT'S NEEDED. THE PUC, CONSUMER ADVOCATE, OTHERS WILL ALL BE AROUND THE TABLE DECIDING WHAT THAT LOOKS LIKE. WE HAVE DOCTORS ALREADY OPEN. POWER SUPPLY IMPROVEMENT PLANS, DISTRIBUTED GENERATION PLANS, A LOT OF STAKE HOLDERS, WE'LL SEE WHAT THE TOTAL RESOURCE MIX WILL LOOK LIKE FOR THE STATE. IT'S NOT GOING TO BE FREE. >>DARYL: SO SOUNDS LIKE YOU'RE SAYING PEOPLE SHOULDN'T EXPECT A BIG DECREASE IN THEIR BILLS FROM THIS MERGER.

WHAT DO YOU THINK OF THE NUMBERS THAT THEY'RE EXPRESSING? >> I THINK ANY SAVINGS IS A STEP FORWARD, BUT I THINK WHAT PEOPLE ARE REALLY EXPECTING, LOOKING FOR IS SOMETHING SUBSTANTIAL THAT THEY'RE GOING TO FEEL. AND TO HAVE REALLY, I MEAN, A FEW CENTS DIFFERENCE ON A MEANINGFUL REGULAR WEEKLY MONTHLY BASIS THAT ADDS UP TO ABOUT 4 OR $500 OVER FIVE YEARS, IS I THINK ANYTHING COMPARED TO WHAT COULD BE SAVED. WHEN YOU TALK ABOUT, I THINK TALKED ABOUT ACCESS TO CAPITAL AND OTHER BENEFITS, WHICH IS FANTASTIC, I THINK THERE'S A DOUBLE EDGED SWORD THERE. SOMETHING THAT PEOPLE HAVEN'T TALKED ABOUT WHICH IS THAT FUTURE INFRASTRUCTURE PROJECTS WE NEED A LOT OF THEM HERE, FUTURE INFRASTRUCTURE PROJECTS ADD TO THOSE COSTS BECAUSE YOU'RE BASICALLY PAYING FOR THOSE AS RATE PAYORS. AND SO THE QUESTION THAT HAS BEEN RAISE BY THE PUC BEFORE IS WHAT LEVEL OF INFRASTRUCTURE, WHAT KIND OF INFRASTRUCTURE AND HOW EXPENSIVE IS IT GOING TO BE? WHAT DO WE NEED IN REAL TERMS? AND THE WALL STREET JOURNAL SORT OF SUMMED THIS UP. BECAUSE PEOPLE NEED TO UNDERSTAND.

YOU INVEST IN THESE PROJECT IT'S AND UTILITY GETS A RETURN. THEY MAKE A PROFIT FOR EVERY DOLLAR THEY SPEND. WALL STREET JOURNAL BASED ON UTILITY PROFIT RECIPE SPEND MORE. CONCERN THAT THE PUC RAISED AROUND THIS OR JUST QUOTE THEM BRIEFLY, IS THE COMMISSION HAS SERIOUS CONCERNS REGARDING THE RECENT TREND OF HECO'S INCREASING EXPENDITURES. DIFFICULT TO ASCERTAIN WHETHER HECO COMPANIES INCREASED CAPITAL INVESTMENTS STRATEGIC INVESTMENTS OR SIMPLY A SERIES OF UNRELATED CAPITAL PROJECTS THAT INCREASE PROFITS BUT APPEAR TO PROVIDE LITTLE OR LONG TERM CUSTOMER VALUE. >>DARYL: I NEED YOU TO HOLD ON FOR A SECOND BECAUSE WE'RE GOING, GETTING AHEAD OF OURSELVES HERE. WHAT I WANT TO GET BACK TO IS IT SOUNDS LIKE WHAT WE'RE SAYING IS DON'T EXPECT A BIG RATE INCREASE, DECREASE RIGHT WAY. WHAT ABOUT LONG TERM? I MEAN, TALKING TEN OR 20, 30 YEARS AWAY, WHEN PEOPLE HAVE THIS VISION OF ALL THE POWER COMING FROM RENEWABLES, FREE, AND MAYBE JUST DELIVERY COST, IS THAT A PANACEA OR IS THAT SOMETHING YOU GUYS CAN PROMISE AT SOME POINT? >> ERIC GLEASON FROM NEXTERA.

FIRST LET ME SAY, DARYL, I THINK WHAT WE'RE OFFERING AS PART OF THIS COMBINATION IS ACTUALLY REDUCING RATES SIGNIFICANTLY. YOU KNOW, WORKS OUT DEPENDING ON WHAT OIL PRICES ARE FOR AS LONG AS WE'RE HOOKED ON OIL. THAT'S PART OF THE PROBLEM. AS LONG AS WE'RE HOOKED ON OIL, NOBODY KNOWS EXACTLY WHAT THE RATE IS GOING TO BE, ROUGHLY SPEAKING, ABOUT 4% OF PEOPLE'S RATES TODAY. SO YOU WOULD LIKE IT GO DOWN MORE THAN THAT I BELIEVE OVER TIME, WE WILL BE ABLE TO GET IT DOWN LOWER THAN THAT. THAT'S WHAT WE'RE ESTIMATING BASED ON THE OPPORTUNITIES WE SEE TODAY TO LOWER COSTS FOR CUSTOMERS AS PART OF THIS MERGER. >> ABOUT 40%? >> YEAH. I'M TALKING ABOUT THE SAVINGS. SAVINGS THAT WE'RE OFFERING IS PART OF THE MERGER IS ABOUT 4% OF THE CUSTOMER'S BILL. SO THE REALLY YOUR QUESTION IS WHAT IS BEYOND THAT? AND I THINK FOR SURE WE KNOW THAT YOU CAN INTRODUCE RENEWABLE ENERGY TODAY CHEAPER THAN OIL. RENEWABLE ENERGY TECHNOLOGY, SOLAR, WIND, GETTING DOWN CLOSE TO TEN CENTS A KILOWATT HOUR. THAT'S THE COST OF THE ELECTRICITY THAT YOU BUY FROM THE SOLAR FARM OR THE WIND FARM, THEN YOU HAVE TO ACTUALLY GET IT DELIVERED TO CUSTOMERS AND THERE'S SOME ADDITIONAL COSTS FOR THAT.

BUT THAT COMPARES WITH THE COST OF OIL FIRE GENERATION WHICH IS UP CLOSER TO TWENTY CENTS A KILOWATT HOUR. >> ONE. THINGS THAT I THINK WE'RE MISSING IS THAT WHEN WE FILED OUR TSIT IN LOOKING AT 2030, WE'RE LOOKING AT A LOWER BILL. NOT JUST LOWER RATE. WHAT WE WANT TO DO IN THE UTILITY OF THE FUTURE HAS TO DO, IS TO GIVE CUSTOMERS OPTIONS ON HOW THEY USE ELECTRICITY AND HOW THEY CAN CONTROL THEIR OWN ENERGY CONSUMPTION. BY DOING THAT, OUR GRID, ELECTRIC VEHICLE, IF YOU CHANGED OUT YOUR GAS CONSUMING VEHICLE TO AN ELECTRIC VEHICLE AND WE MADE IT POSSIBLE FOR YOU TO DO THAT WITH USE RATES THAT YOU CAN FUEL IT WITH THE SUN AT A LOWER RATE, THE TOTAL ENERGY BUDGET FOR A FAMILY OF FOUR WOULD DECREASE BY 30% TODAY. YOU WOULD BE GIVING UP NOTHING. DRIVING ELECTRIC VEHICLE INSTEAD OF A GAS CONSUMING VEHICLE. BUT POWERING THAT WITH ELECTRICITY. SO THERE'S WAYS FOR THE FAMILY TO SAVE REAL DOLLARS IF YOU LOOK AT THE TOTAL ENERGY PICTURE. THAT'S WHERE OUR STATE IS HEADED.

LOOK AT THE TOTAL CARBON FOOTPRINT OF THE STATE, NOT JUST HOW WE PRODUCE ELECTRICITY. >>DARYL: WE'RE GOING TO GET TO THE 100% RENEWABLE ISSUE PROBABLY AFTER A BREAK. BUT I WANT TO READ A NUMBER OF QUESTIONS WE HAVE. A LOT OF SUSPICION IN AMONG OUR AUDIENCE ABOUT THE ISSUE OF PROFITS AND BIG MONEY AND SO ON AS YOU MIGHT EXPECT. I'M AGAINST THE MERGER BECAUSE IT'S SIMILAR TO HOW RAIL IS BEING FORCED ON US. >> SOMEBODY IS MAKING BIG BUCKS ON THIS MERGER AN AND IT IS POLITICAL. ANOTHER ONE SAYS I'M AGAINST THE MERGER. CONSTANT LAU, HEI CHAIR STANDS TO MAKE $10 MILLION. I THINK IT'S A LITTLE LESS THAN THAT, BUT AGAIN, QUESTION OF BIG MONEY. COUPLE OF QUESTIONS HERE ABOUT PEOPLE WHO ARE GOING TO BE MAKING THE MONEY IS THE SHAREHOLDERS AND THE PEOPLE ON THE MAINLAND WHO ARE GOING TO TAKE AWAY THE PROFITS SUCKING MONEY OUT OF THE ECONOMY. LET ME START WITH JEFFREY ONO BECAUSE HE ANALYZED THIS.

IS PROPERTY ISSUE AN ISSUE OR THIS MERGER OR ANY INVOLVEMENT WITH THE UTILITY THAT'S INDEPENDENTLY OWNED UTILITY? >> YES, IT IS. YOU KNOW, OUR POSITION IS RIGHT NOW, HAWAIIAN ELECTRIC'S RETURN ON EQUITY IS TOO HIGH. IT NEEDS TO BE RESET. AND THEN IF THIS MERGER IS TO BE APPROVED, NEXTERA IS SAYING THAT THEY CAN LOWER THE COST OF CAPITAL. THEY CAN LOWER THE COST OF MONEY TO THE HAWAIIAN ELECTRIC COMPANIES. SO THAT'S EVEN MORE REASON WHY THE RETURN ON EQUITY OUGHT TO BE LOWER. SO THAT PROFIT MARGIN, THE PROFIT THEY MAKE ON THEIR CAPITAL INVESTMENT NEEDS TO BE LOWERED. RIGHT NOW, IT'S AT 10% FOR HAWAIIAN ELECTRIC, HAWAI'I ELECTRIC LIGHT. MAUI ELECTRIC IS AT 9%. WE'RE SAYING ALL THREE OF THEM SHOULD BE AT 9%. THAT SHOULD BE A DAY ONE, IF THIS MERGER IS TO BE APPROVED. >>DARYL: THAT'S A GUARANTEED PROFIT, OR THE MARGIN THAT WOULD BE ALLOWED BY THE PUC. >> THE AN OPPORTUNITY FOR THE UTILITY TO RETURN RETURN ON THEIR CAPITAL INVESTMENT.

>>DARYL: LET YOU FOLKS HAVE A SHOT AT THAT. PUBLICLY HELD COMPANY. BEHOLDING TO SHAREHOLDERS. PROBABLY MAINLAND SHAREHOLDERS AND HAWAIIAN ELECTRIC SHAREHOLDERS. DO YOU ANSWER WHEN PEOPLE SAY YOU'RE GOING TO PROFIT ON LITTLE OLD HAWAI'I HERE. >> I THINK THERE'S TWO SEPARATE ISSUES HERE. I THINK THE ISSUE THAT JEFF IS TALKING ABOUT IS WHAT KIND OF PROFITABILITY SHOULD THE UTILITY BE ALLOWED TO HAVE. WHAT KIND OF OPPORTUNITY SHOULD THEY HAVE. I THINK THE MORE GENERAL CONCERN THAT PEOPLE HAVE IS IF A MAINLAND COMPANY COMES IN AND ACQUIRES LOCAL UTILITY, AREN'T THEY TAKING LIKE YOU SAID, SUCKING THE PROFITS SOMEWHERE ELSE? I THINK THAT'S ACTUALLY AN UNDERSTANDABLE CONCERN. BUT PROBABLY IT'S BASED ON A MISUNDERSTANDING OF WHAT PROFITS ARE. I MEAN, WHAT'S REALLY, WHAT PEOPLE SHOULD REALLY THINKING ABOUT, I THINK, IS CASH.

CASH COMING TO HAWAI'I OR IS CASH GOING OUT OF HAWAI'I. AND WE CERTAINLY BELIEVE THAT FOR DECADES WE'RE GOING TO BE INVESTING INTO HAWAI'I. NOT TAKING MONEY OUT. HAWAI'I NEEDS A LOT OF CAPITAL TO AFFECT THIS TRANSFORMATION TO CLEAN ENERGY. THE PROFITS ARE GOING TO BE REINVESTED IN HAWAI'I FOR DECADES TO COME. >> WHAT I WAS ALLUDING TO EARLIER. THERE'S A QUESTION AS TO WHAT SORT OF INVESTMENTS ARE GOING TO BE MADE, WHAT SORT OF SPENDING UTILITIES GOING TO HAVE. THE MORE THEY SPEND, THE BIGGER THE PROFIT IS. THAT'S WHERE THE INCENTIVE IS. SO THE QUESTION FROM THE CONSUMER HOW MUCH IS MY BILL GOING TO GO UP BY ALL THE DIFFERENT PROJECT IT'S GOING ON AND MORE IMPORTANTLY, ARE THOSE PROJECTS REALLY NECESSARY, ARE THEY THE CADILLAC IN A PLATINUM PROJECTS OR ARE WE DOING JUST WHAT'S NECESSARY IN THE LONG TERM? SO WHEN YOU TALK ABOUT PROFIT AS PART OF THIS, I THINK THE BIGGEST THING, I'LL SAY, I BELIEVE HECO WANTS TO DO THE RIGHT THING, PEOPLE WHO HAVE BEEN IN CHARGE, I THINK THEY'RE GOOD PEOPLE, BUT I THINK THEY HAVE HAD TO MAKE DECISIONS THAT COMPROMISE THE INTEREST OF OUR LOCAL PEOPLE IN ORDER TO SATISFY SHAREHOLDERS.

THAT HAS RAISED COSTS. THIS IS THE POTENTIAL RISK THAT ALL THIS NEW INVESTMENT, IF NOT MONITORED, PUC SAID A LOT OF THIS INVESTMENT SO FAR HAS NOT BEEN SUBJECT TO THEIR APPROVAL. THAT COULD RAISE COSTS SIGNIFICANTLY FOR PEOPLE. >> IF I MAY JUMP IN. PUC JUST CHANGED THE MODEEL ON HOW WE ARE COMPENSATED ON OUR CAPITAL INVESTMENTS. WE ALREADY HAVE STARTED TO MONITOR MORE CLOSELY WHAT'S NECESSARY, WHAT'S NOT. BUT THE MODEL THAT DECOUPLING MODEL NOW UNDER OUR RAM IS A LOT MORE COMPREHENSIVE. SO OUR CAPITAL BUDGET FOR THIS YEAR AND THIS TRANSITION YEAR AS WE TRANSITION TO THE NEW REGULATORY IS ABOUT 300 MILLION. >> ABOUT 30 SECONDS WE'RE GOING TO COME BACK AND ASK FOR A LAYMAN'S VERSION OF THAT. WE'RE ALSO GOING TO TALK ABOUT, I'M NOT TEASING YOU,. >> OH, NO. TOTALLY UNDER. >>DARYL: CURVE BALLS TO ME.

I'M SURE TO OUR AUDIENCE. WHEN WE COME BACK AFTER SHORT BREAK, WE'LL ALSO TALKING ABOUT THESE ALTERNATIVE THINGS LIKE CO-OP AND TALK QUITE BAIT MORE ABOUT RENEWABLE ENERGYMENT FOR NOW, TONIGHT I WANT TO REMIND OUR AUDIENCE WE'RE TALKING ABOUT THE FUTURE OF HAWAI'I'S LARGEST POWER UTILITY, PLEASE CALL, E-MAIL OR TWEET YOUR QUESTIONS AND COMMENTS. CALL 973-1000 YOU'RE CALLING FROM OAHU. 800-238-4847 IF YOU'RE CALLING FROM A NEIGHBOR ISLAND. I KNOW ALAN OSHIMA FROM HECO I CUT YOU OFF HERE. PLEASE EXPLAIN TO ME AS BRIEFLY AS YOU CAN YOU'RE SAYING THAT WHAT CHRIS LEE IS SAYING IS REALLY NOT CORRECT IN TERMS OF YOU FOLKS BUYING CADILLACS AND SPENDING MONEY ON THINGS YOU DON'T NEED? IS THAT A FAIRWAY OF EXPRESSING WHAT CHRIS IS SAYING.

>> THAT'S NEVER BEEN THE INTENT. WE HAVE REALLY GOOD PEOPLE. COMMITTED TO THE CUSTOMERS. THAT WAS NEVER THEIR INTENT. I WILL ADMIT, HOW MUCH, SOMETIMES WE DON'T EXPLAIN WHAT WE'RE DOING ADEQUATELY. WE'RE REALLY TRYING TO CHANGE THAT. BUT THE COMMISSION JUST GAVE US A NEW WAY OF DOING THINGS. SO WE ARE NOT GOING TO JUST BE FILING THINGS AND JUST AUTOMATICALLY BEING COMPENSATED FOR IT. THE COMMISSION HAS LOWERED AMOUNT THAT WE WILL BE ALLOWED TO DO SOME OF THE FOUNDATIONAL THINGS. OTHER THAN ABOVE THOSE CAPS, THE COMMISSION IS GOING TO BE LOOKING AT IT. WE'RE GOING TO HAVE TO PROVE OUR CASE. SO WE'RE IN A TRANSITION YEAR THIS YEAR AND I THINK IT'S CHANGED. >>DARYL: I'M GOING TO REFER THESE QUESTIONS TO YOU FIRST FOR DEFINITIONS, A LOT OF QUESTIONS ABOUT WHAT 100% RENEWABLE UTILITY, MANY PEOPLE SAYING, GERMANY RECYCLES, AND GENERATE ENERGY, THEIR COSTS HAVE INCREASED TOO.

ALSO, SAYING WHEN ARE QUESTION GOING TO GET OFF OIL? WHAT WE NEED IS A COMPANY THAT WILL PROVIDE 100% ALTERNATE ENERGY SOON. HOW LONG WILL IT TAKE TO GET OFF OF OIL. WHAT IS YOUR FOLKS' THOUGHT ABOUT, WHAT DOES IT MEAN WHEN WE SAY 100% RENEWABLE AS A GOAL FOR A UTILITY? WHAT IS THE RENEWABLE PEACE OF THAT? >> WELL, FIRST OF ALL, IT'S NOT 100% RENEWABLE ENERGY. THE LAW THAT WAS PASSED IS 100% RPS, RENEWABLE ENERGY PORTFOLIO STANDARD. SO THAT'S DEFINE AS NET ENERGY SALE. THAT ELECTRICITY SALES DIVIDED BY THE AMOUNT OF RENEWABLE ENERGY. IT DOESN'T MEAN THAT THE UTILITY CAN HAVE ZERO FOSSIL FUEL GENERATION ON ITS SYSTEM. BUT IT CERTAINLY MEANS THAT WE'RE GOING TO HAVE TO HAVE A SIGNIFICANT AMOUNT MUCH RENEWABLE ENERGY IN ORDER TO EVEN MEET THAT 100% RPS, RENEWABLE PORTFOLIO STANDARD. >>DARYL: SO HOW DOTS THAT TRANSLATE? HELP ME WITH THIS. UNDER WHAT JEFF ONO JUST DESCRIBED, HOW MUCH OF THE ELECTRICITY YOU GENERATE UNDER THIS 100% IS ACTUALLY GOING TO BE RENEWABLES? IF YOU MEET THIS GOAL? >> WELL, WE'RE GOING TO TRY TO GET, I MEAN SHALL REALLY TRY, TO GET TO THE 100% RPS THAT'S CURRENTLY STRUCTURED, BUT OUR REAL INTENT IS MUCH RENEWABLE.

WE REALLY BELIEVE THAT TECHNOLOGY IS GOING TO DRIVE — THE PRICES ON RENEWABLE ENERGY HAVE DROPPED DRAMATICALLY JUST IN THE LAST FEW YEARS. OUR GRID SOLAR PROJECTS THAT WE JUST APPROVAL FOR IS COMING IN AT 1.5 CENTS PER KILOWATT HOUR. WE'VE GOT SOME APPLICATIONS IN THERE FOR BETWEEN 11 AND 12 CENTS PER KILOWATT HERE. THAT'S SOLAR. YOU KNOW, WE EXPECT WIND TECHNOLOGY TO IMPROVE. WE EXPECT BATTERY TECHNOLOGY TO IMPROVE. AND PRICES TO DROP. SO AS YOU LOOK AT — PEOPLE EXPECT IMMEDIATE CHANGE, BUT THAT'S NOT HOW UTILITIES WORK FOR CAN WORK. YOU HAVE TO MAKE REALLY OPTIMAL DECISIONS ECONOMICALLY. YOU HAVE TO LOOK AT CONTINUUM OF CHANGE TO GET TO WHERE YOU'RE GOING TO BE. IN THE MEANTIME, WE ALSO HAVE TO HONOR CONTRACTS.

THE LAW WAS DIFFERENT IN THE PAST. WHEN WE WERE REALLY REQUIRED TO BUY FROM INDEPENDENT POWER PRODUCERS AT THE COST AT WHAT IT COST US TO PRODUCE ENERGY. >>DARYL: LIKE HPOWER, COAL PLANTS? AND THIRD-PARTIES. >> NOT RELATE THE TO US. WE DON'T MAKE A DIME ON WHAT WE RESELL. ALTHOUGH WE ARE REQUIRED TO REALLY DO A LOT OF DUE DILIGENCE TO MAKE SURE THEY'RE GOING TO SERVE THE CUSTOMER INTEREST AND WE KIND OF MONITOR IT. WE DON'T PROFIT BY THAT AT ALL. BUT WE HAVE TO HONOR THE CONTRACTS THAT WERE SET QUITE A WHILE AGO AND THEY'RE AT A HIGHER LEVEL. >>DARYL: REPRESENTATIVE LEE, YOU WERE AMONG THE PEOPLE STANDING FOR THIS LAW. I'M GOING TO THROW YOU A SOFTBALL HERE. WHY DON'T YOU THINK THAT NEXTERA IS ABLE TO — >> CAN WE GET A SOFTBALL TOO? (LAUGHTER) >>DARYL: I THOUGHT I THREW I A COUPLE EARLIER. THAT'S OKAY. WHAT ARE THE CONCERNS ABOUT NEXTERA'S ABILITY TO MEET THIS? THEN I'LL LET ERIC RESPOND. >> WELL, I DON'T THINK IT'S SO MUCH A CONCERN ABOUT WHETHER OR NOT THEY CAN MEET 100% RENEWABLE ENERGY.

I THINK WE'RE ALL IN THE SAME, WHAT EVERYBODY WANTS TO GET THERE. I THINK THE CONCERN IS THAT THE WAY THAT TECHNOLOGY IS EVOLVING, YOU HAVE A LOT MORE TECHNOLOGY BATTERIES, PV, OTHER THINGS AVAILABLE TO PEOPLE AT A MUCH CHEAPER COST. SO THE QUESTION IS DOES THE UTILITY MAKE BIG INVESTMENTS IN BIG SOLAR FARMS AND OTHER THINGS LIKE THAT THAT ALL RATE PAYORS HAVE TO PAY FOR, OR DO YOU CAPITALIZE ON INDIVIDUAL INVESTMENT, PEOPLE WANTING TO PUT PV AND BATTERY IT'S ON THEIR OWN HOME AND THE UTILITY HAVING THE INCENTIVE TO ADAPT TO THAT AND TO UTILIZE THAT. BECAUSE IF THEY DO THAT, YOU CAN PROBABLY GET THERE FOR A LOT CHEAPER. THE CATCH IS IF YOU DON'T DO THAT, AND YOU PUSH BACK BECAUSE YOU WANT TO PROTECT THE BUSINESS MODEL WHICH IS SORT OF THE TRADITIONAL CENTRALIZED UTILITY BUSINESS MODEL, YOU MAY RUN INTO PROBLEMS.

>>DARYL: DO YOU THINK GIVEN THEIR BUSINESS MODEL, THEY CAN REALLY — THEY MAY BE ABLE TO DO THIS, BUT IS IT GOING TO TRANSLATE TO THE RATE PAYORS THE WAY YOU'RE HOPING IT WOULD? >> THAT'S THE PROBLEM. BEFORE WE WERE MAXIMIZED PUBLIC BENEFIT AND MAXIMIZE THE RATE PAYOR SAVINGS, I'VE GOT TO GET A UTILITY THAT DOESN'T HAVE A FINANCIAL INCENTIVE TO OPPOSE THE PROLIFERATION OF NEW TECHNOLOGY AND DISTRICTED GENERATION AND SECONDLY, I THINK EVERYBODY HAS SAID THIS, IS THE WAY THE UTILITY NEEDS TO GO. UTILITY THAT TRANSFORMS ITSELF FROM A GENERATOR TO UTILITY THAT MANAGES A GRID ON WHICH EVERYBODY CAN GENERATE POWER IN THE LONG RUN. THE QUESTION IS WHAT INCENTIVE DOES THE UTILITY HAVE TO ACTUALLY GET THERE WHEN THEY HAVE TO KEEP SHAREHOLDER PROFITS STREAMING. >>DARYL: YOU HEARD IT ALL. I THINK THAT — >> A LOT OF IT.

>>DARYL: A BIG PART OF THE QUESTION, WE DID GET ONE CALLER SAID, ERIC SAID THEY COULD OFFER, USING FIRST NAME. HE'S GOING TO ASK. FIRST NAME BASIS NOW. CAN OFFER LOWER ENERGY COSTS IN FLORIDA, THEY USE LIQUID NATURAL POWER, AND GAS. YOU TALK ABOUT HOW THE RATES ARE, RENEWABLE ENERGY COMPANY. FLORIDA IS REALLY DIFFERENT FROM HAWAI'I. PEOPLE WONDER CAN YOU TRANSLATE SUCCESS LIKE THAT HERE? LET ME — CAN I RESPOND? >> PLEASE. >> >> KIND OF LOADED IT UP FOR YOU. >> THANK YOU. SO REPRESENTATIVE LEE, I MEAN, WE ABSOLUTELY EMBRACE TECHNOLOGY AND DISTRIBUTED ENERGY. AS TO WHETHER SOMEHOW THE UTILITY WILL BE INCENTIVIZED TO MAKE INVESTMENTS THAT ARE JUST GOOD FOR THE SHARE HOLDERS AND NOT THE CUSTOMER IT'S, THE DOCUMENT YOU WERE READING FROM WAS PUT OUT BY THE COMMISSION ASSOCIATED WITH A DECISION OVER 2 YEARS AGO. IF YOU KEEP READING THROUGH THE DOCUMENT, YOU'LL SEE THEY SPECIFICALLY COMMENDED FLORIDA POWER AND LIGHT, WHICH IS OUR UTILITY FOR BEING A COMPANY THAT REALLY PUTS CUSTOMERS FIRST AND STARTS BY LOOKING AT WHAT IS THE RIGHT THING FOR CUSTOMERS.

AND THERE'S SOMETHING THAT WE CALL THE VIRTUOUS CIRCLE. HOPEFULLY, WE GET GOOD REGULATORY OUTCOMES AND CAN ATTRACT MORE CAPITAL, MAKE INVESTMENTINGS THAT WILL DO THE RIGHT THING FOR CUSTOMER INCLUDING LOWERING BILLS. THOSE ARE THE KIND OF INVESTMENTS THAT WE TRY TO MAKE AND THAT'S BEEN OUR TRACK RECORD IN FLORIDA. SO WITH RESPECT TO FLORIDA, FLORIDA IS NOT HAWAI'I. WE CERTAINLY UNDERSTAND THAT. I'VE LIVED IN BOTH PACE PLACES. THEY'RE NOT SAME. I WILL SAY CUSTOMERS IN BOTH PLACES DO LIKE LOWER COST ENERGY. I THINK THE PRIORITY HERE, THERE'S MUCH MORE OF FOCUS ON RENEWABLE ENERGY THAN IN FLORIDA. WE HAVE T&C THAN FLORIDA. WE HAVE MORE RENEWABLE ENERGY IN FLORIDA. 55 IN OTHER STATES. LOWEST BILLS. BIG BELIEVES THAT CLEANER AND LOWER ENERGY CAN GO TOGETHER. WE HAVE NATURAL GAS, NOT LICK WHICH LIQUEFIED NATURAL GAS, BROUGHT IN BY PIPELINES. NUCLEAR ENERGY. IN FLORIDA AND AS MUCH AS THE MAINLAND. NUCLEAR ENERGY WILL NEVER BE PART OF THE HAWAI'I.

I WANT TO TAKE THAT OFF THE TABLE RIGHT NOW. AND NATURAL GAS MAY OR MAY NOT. BUT REGARDLESS. >> OUR FOCUS IS GOING TO BE ON DOING THE RIGHT THING FOR CUSTOMERS AND COMMUNITIES, GETTING COSTS DOWN, BRINGING IN RENEWABLE ENERGY. THAT'S OUR FOCUS. MAKING INVESTMENTS THAT WILL SUPPORT THAT RATHER THAN WORK AGAINST IT. >> >>DARYL: ONE QUICK QUESTION. WHEN YOU TALK ABOUT RENEWABLE ENERGY, THIS IS GETTING BACK TO REPRESENTATIVE LEE'S ORIGINAL QUESTION, AND NUMBER OF QUESTIONS HERE ABOUT ROOFTOPS SOLAR SPECIFICALLY, THERE IS A REAL PERCEPTION OUT THERE THAT YOU FOLKS ARE AGAINST ROOFTOP SOLAR THAT YOU PREFER TO BE THE GENERATOR YOURSELVESES. DO YOU DENY THAT? >> YES, I DO. WOULD YOU LIKE ME TO ELABORATE? >>DARYL: YES. >> WHAT HAPPENS IS THAT PEOPLE LOOK AT HOW MANY ROOFTOP SOLAR COMPANIES WE HAVE IN OUR FLORIDA POWER AND LIGHT SERVICE TERRITORY WHICH IS ACTUALLY QUITE FEW. LITTLE OVER 3,000 OUT OF 4.8 MILLION CUSTOMERS.

IT'S A VERY SMALL PERCENTAGE. I LOOK AT THAT AND THEY SAY, WELL, SURELY IF THAT'S ANY INDICATION, NEXTERA ENERGY IS GO GOING TO BE MUST BE DOING SOMETHING TO CAUSE SO FEW CUSTOMERS TO HAVE ROOFTOP SOLAR AND PROBABLY GOING TO TRY TO DO THE SAME THING HERE. SO LET ME AGAIN SAY WE UNDERSTAND FLORIDA IS NOT HAWAI'I. BUT ALSO, WE'RE VERY PROUD OF OUR TRACK RECORD IN FLORIDA. THE FACTS ARE WE DON'T STAND THE WAY OF OUR CUSTOMERS WHO WANT ROOFTOP SOLAR. TYPICALLY ON AVERAGE, IT TAKES 12 DAYS FROM THE TIME WE GET COMPLETED APPLICATION FROM A CUSTOMER TO THE TIME WE GO IN AND WE SWAP OUT THEIR METER AND THEIR SYSTEM IS READY TO GO. 12 DAYS. SO IF THEY WANT IT, THEY'VE GOT IT. NET ENERGY METERING FULL RETAIL RATES LIKE YOU HAD HERE UNTIL RECENTLY. IF YOU'RE IN THE SOLAR BUSINESS, PROBLEM IS THE RATES ARE SO LOW. RATES ARE RIGHT NOW, 9.

7 CENTS A KILOWATT HOUR FOR RESIDENTIAL CUSTOMER. >> ABOUT A THIRD THE AVERAGE OF A HAWAIIAN ELECTRIC COMPANY. THEY'RE ABOUT TO GO DOWN AGAIN. SO FORTUNATELY, FROM ECONOMIC PERSPECTIVE, SOLAR ENERGY JUST DOESN'T COMPETE IT AT THOSE LEVELS. THERE ARE CUSTOMERS WHO HAVE IT BUT IT'S MORE BECAUSE THEY WANT THE SOLAR ENERGY RATHER THAN TO SAVE MONEY. >>DARYL: I HAVEN'T GIVEN YOU A CHANCE. HOW DO YOU RESPOND IT THAT ON THIS ISSUE OF NEXTERA'S ABILITY OR INTEREST IN GETTING TO THE MODEL YOU FOLKS WANT? >> WELL, ERIC IS RIGHT. WHEN HE SAYS THAT FLORIDA POWER AND LIGHT IS AT 9.7 CENTS, THAT CHANGES THE ECONOMICS FOR A CUSTOMER'S DESIRE TO PUT ON ROOFTOP SOLAR. YOU KNOW, IT'S VERY DIFFICULT TO COMPARE THE FLORIDA SYSTEM WITH HAWAI'I. HAWAI'I IS JUST SO UNIQUE. CHALLENGES ARE IN HAWAI'I ARE MUCH, MUCH GREATER. THEY HAVE PIPELINE GAS INTO FLORIDA. IF WE'RE EVER GOING TO HAVE NATURAL GASES, IT HAS TO COME FROM LNG AND THE GOVERNOR HAS SAID HE OPPOSES THE LARGE INFRASTRUCTURE NECESSARY FOR LNG IMPORTATION TO THE STATE. IT'S DIFFICULT TO KNOW TO WHAT EXTENT FLORIDA POWER AND LIGHT, NEXTERA WOULD TRY TO BLOCK ADDITIONAL ROOFTOP SOLAR IN HAWAI'I.

BUT WHAT OUR CONCERN IS ON THIS MERGER, IS NOT SO MUCH THAT THEY'RE GOING TO BE BLOCKING IT, BUT IT'S WHAT KIND OF EXPERIENCE CAN THEY REALLY BRING TO THE TABLE TO HAWAI'I. HAWAIIAN ELECTRIC HAS ALL THE EXPERIENCE INTEGRATING ALL OF THIS ROOFTOP SOLAR ON TO THE SYSTEM, FAR GREATER PERCENTAGE THAN FLORIDA POWER AND LIGHT. 12 DAYS, YES, BECAUSE THEY HAVE SO FEW APPLICATIONS. HAWAIIAN ELECTRIC HAS THOUSANDS OF APPLICATIONS. SO YOU KNOW, IN THE QUEUE. IT'S A DIFFERENT COMPARISON. WE WANT TO SEE REAL EXPERIENCE LEVEL IN THEIR ENGINEERING COMING TO HAWAI'I IF THE MERGER IS TO BE APPROVED. >> I WANTED TO, I GUESS RESPECTFULLY DISAGREE WITH ERIC ON THE WHOLE SOLAR ISSUE. I THINK THE REASON THAT YOU'VE HAD SUCH STAGNATION OF ROOFTOP SOLAR AND OTHER THINGS LIKE THAT IN FLORIDA IS BECAUSE RATES ARE LOW. BUT RATES ARE LOW, LET'S JUST CALL IT WHAT IT IS, BECAUSE OF THE POLITICAL MAKE-UP AND THE INFLUENCE UTILITY HAS HAD DRIVING THOSE REGULATIONS TO PREVENT PEOPLE FROM BEING ABLE TO TAKE ADVANTAGE OF THINGS JUST BASIC THINGS, LIKE LEASING OPTIONS FOR SOLAR POWER, I MEAN, BASICALLY,.

>>DARYL: REALLY, ISN'T THAT WHAT MOST PEOPLE JUST WANT, THEY WANT LOW RATE IT'S AND RELIABILITY? >> ABSOLUTELY DO. MORE THAN THAT, I THINK, PEOPLE WANT THE ABILITY TO DO IT THEMSELVES AND TAKE CONTROL OF THEIR OWN BILL. IF THAT MEANS PUTTING IN SOLAR AND BATTERIES AND DOING THEIR OWN THING. IT DOES. WHAT IT REALLY GETS TO IS I THINK DIFFERENT CULTURE IN FLORIDA WHERE YOU HAVE UTILITIES AND FPO, FLORIDA POWER AND LIGHT, NEXTERA IS NOT ONLY ONE, BUT THEY'RE ONE OF THE BIGGEST THATS THAT MADE I THINK OVER $7 MILLION IN CAMPAIGN CONTRIBUTIONS IN THE LAST YEAR PUSHING FOR SPECIFIC LIMITS ON SOLAR. MIAMI HERALD DID AN EXPOSE BIG ENERGY CAMPAIGN CASH KEEPS THINGS DOWN IN FLORIDA. HEADLINES. THESE THINGS AREN'T QUESTIONS, IT'S FACT. HERE WE'RE TALKING ABOUT DIFFERENT. WE WANT TO BE CLEAR UTILITIES HAVE AN INTEREST IN KEEPING CONTROL CENTRALIZED. THAT'S SORT OF THE CONCERN HERE.

>>DARYL: ERIC GLEASON, GIVE YOU A CHANCE TO RESPOND TO THAT. I MEAN, I THINK DARYL YOU MADE THE RIGHT POINT, FUNDAMENTALLY, OUR CUSTOMERS ARE HAPPY BUNCH. BOY AND LARGE, VERY HIGH CUSTOMER SATISFACTION AND LARGELY BECAUSE WE OFFER VERY LOW RATES. VERY HIGH RELIABILITY AND GOOD CUSTOMER SERVICE. SO AS I SAY, THE CUSTOMER WANTS TO PUT IN ROOFTOP SOLAR THEY CAN. WE'RE NOT STANDING IN THEIR WAY. >>DARYL: LET'S MOVE ON NOW I THINK TO THESE OTHER MODELS W HE DID GET A NUMBER OF CALLS FROM PEOPLE WHO ARE INTERESTED IN THE MOVEMENT THAT EMERGED TO SOME PEOPLE, QUITE OUT OF THE BLUE, THIS WHOLE CO-OP THING. I KNOW REPRESENTATIVE LEE, YOU'VE ACTUALLY SAID THAT YOU WOULD BE WILLING TO USE EMINENT DOMAIN OR THE STATE'S POWER TO ACTUALLY BUY THE UTILITY AND TAKE IT OVER.

WHY IS IT SO IMPORTANT TO YOU AND SUPPORTERS OF THIS MODEL THAT THE GOVERNMENT OR NONPROFIT ORGANIZATION TAKE OVER THIS? >> FIRST OF ALL, TO BE CLEAR, I DON'T HAVE THE POWER OF EMINENT DOMAIN. THE COUNTIES AND THE STATE AND EVERYBODY ELSE HAS A NUMBER OF ABILITIES TO DO THAT. BUT IT TAKES A COLLECTIVE DECISION. I THINK WHAT PEOPLE REALIZE AS ELECTED LEADERS, WE, IT'S NOT SOMETHING THAT WE SHOULD LOOK AT. WE HAVE AN OBLIGATION TO LOOK AT OTHER ALTERNATIVES BECAUSE IT'S OUR JOB TO PROTECT THE PUBLIC'S INTEREST. THAT'S OUR JOB. THAT MEANS PUTTING EVERYTHING ON THE TABLE. TO BE CLEAR, THIS DISCUSSION WE'RE HAVING IS BEYOND WHAT'S IN FRONT OF THE PUC RIGHT NOW. THE PUC IS DECIDING WHETHER OR NOT NEXTERA IS A GOOD REPLACEMENT FOR HECO IN THE CONTEXT OF EXISTING INVESTOR OWNED CENTRALIZED UTILITY. WHAT WE HAVE THE OBLIGATION TO ASK IS WHAT DO PEOPLE REALLY WANT IN HAWAI'I? WHAT DO WE WANT FOR OURSELVES IN YEARS TO COME? IT MAY NOT BE THAT SAME MODEL.

IS AS WE LOOK INTO THIS, THE THINGS WE'RE SEEING THAT'S REALLY DRIVING THIS DISCUSSION IS THAT NUMBER ONE, COOPERATIVE, PUBLIC UTILITIES AROUND THE COUNTRY HAVE TYPICALLY-SHALL. >>DARYL: LET ME INTERRUPT YOU. TAKE A STEP BACK. TELL ME WHAT'S A COOPERATIVE. >> ON KAUAI, WE HAVE A COOPERATIVE RIGHT NOW WHICH IS UTILITY OWNED BY ALL ITS MEMBERSHIP. ALL THE RATE PAYORS COLLECTIVELY OWN THE UTILITY. THEY ELECT THEIR OWN LEADERSHIP IN REGULAR ELECTIONS AND THOSE LEADERS DRIVE UTILITY DECISIONS WITH A SOLE INTEREST IN BENEFITING THE PUBLIC IN LOWERING RATES. >>DARYL: DOES IT WORK? >> I THINK IT DOES. I THINK YOU HAVE — >> I WAS PART OF THAT FORMATION. AS THE ATTORNEY. >>DARYL: YOU WERE THE ATTORNEY. >> SOLAR ATTORNEY. IT WAS A HARD ROAD.

CO-OPS DO A ROLE BUT IT'S NOT ALWAYS JUST TO LOWER RATES. ONE OF THE ATTRACTIVE THINGS IS THAT THE CO-OPS COULD DO THINGS THAT ARE CONTRARY TO WHAT STATE POLICY MIGHT BE. I MEAN, IN A GENERAL SENSE, THEY MIGHT WANT MORE GREEN ENERGY AND ACTUALLY HAVE HIGHER RATES. THAT MAY BE THE CASE. OR THEY MAY REJECT SOME OF THAT FOR THE LOWER RATES. SO THAT'S CORRECT. CO-OPS ARE GENERALLY IN SMALLER SERVICE TERRITORIES AND THEY ARE ABLE TO ATTRACT FEDERALLY SOCIALIZED LOANS. BECAUSE THERE'S A NATIONAL INTEREST IN GETTING ELECTRIFICATION TO ALL OF OUR AREAS. IT'S NOT UNIVERSAL MODEL AND YOU HAVE VERY DIFFERENT TYPES OF CO-OPS AS WELL. YOU HAVE DISTRIBUTION CO-OPS THAT BUY THEIR ENERGY FROM GENERATORS. OR YOU GENERATOR IT'S CO-OPS. KAUAI HAPPENS IT BE A GENERATION CO-OP BECAUSE OF OUR ISLAND GEOGRAPHY. IT HAS TO BE. >> ABSOLUTELY RIGHT.

THE IMPORTANT THING IS CO-OPS SERVE INTEREST OF MEMBERS AT DISCRETION OF THEIR MEMBERS. IF THEY WANT SOMETHING, THEY'LL DO IT. THAT'S THE FUNDAMENTAL DIFFERENCE BETWEEN UTILITIES AND CO-OPS. OTHER THINGS CO-OPS HAVE, LOWER ACCESS TO CAPITAL THAN EVEN THAN THE TRADITIONAL INVESTOR OWNED UTILITY. TYPICAL LOWER RATES, CUSTOMER SATISFACTION,. LOOK AT KAUAIAN HECO, COSTS HAVE HECO HAVE GONE UP TWICE AS FAST. >>DARYL: YOU'VE BEEN WATCHING THIS FROM THE MIDDLE AND I'M WONDERING. >> FASCINATING. >>DARYL: THIS DEBATE ABOUT ALTERNATIVES, WHAT OTHER ALTERNATIVES, TRY TO SUM UP QUICKLY. CITY OWNED, BOARD OF WATER SUPPLY TYPE COMPANY. DO YOU THINK THAT'S CONCEPTS HAVE BEEN THROWN OUT TO CONFUSE THE ISSUE AND CREATE A POLITICAL FURTHER POLITICIZE WHAT YOU'RE GOING THROUGH?. I THINK THERE IS A GENUINE DESIRE BY MANY PEOPLE IN THE STATE TO HAVE MORE OF A SAY IN THE FUTURE OF ENERGY AND AS PART OF THAT IN WHAT ELECTRIC UTILITIES ARE DOING HERE. I THINK THAT'S GENUINE AND KIND OF VERY GRASS ROOTS. YOU KNOW, THERE MAY BE SOME FOLKS WHO ARE KIND OF CONFUSING THE ISSUE A LITTLE BIT, BUT I APPRECIATE WHAT REPRESENTATIVE LEE SAID, WHICH IS THIS WHOLE IDEA OF MUNICIPAL OR CO-OP UTILITY IS NOT SOMETHING THAT THE ACOMMISSION IS CONSIDERING RIGHT NOW THE THEY HAVE MAKE A DECISION ON THE MERGER.

SO BUT IN PARALLEL, THERE IS THIS DISCUSSION, THIS DIALOGUE THAT'S TAKING PLACE ABOUT MUNICIPAL AND COOPERATIVE UTILITIES. WE EMBRACE THAT. THERE'S NOTHING WRONG WITH HAVING THAT CONVERSATION. I THINK ACTUALLY, IT'S REALLY HELPING REINFORCE FOR US THE IMPORTANCE OF ENGAGING WITH COMMUNITIES AND THERE'S NO REASON, ACTUALLY NO REASON WHY AN INVESTOR OWNED UTILITY CAN'T BE JUST AS RESPONDIVE TO ITS CUSTOMERS AND COMMUNITIES AS OTHER OWNERSHIP. >>DARYL: YOU'RE RESTRICTED IN YOUR ROLE. COMMENTING ON WHAT IS BEFORE THE PUC PRIMARILY. YOU'VE BECOME QUITE AN EXPERT ON ENERGY. >> PROBABLY NOT ON PURPOSE. >> HOW DO YOU FEEL ABOUT THIS CONCEPT OF WITH THE CONSUMER ADVOCATE SUPPORT A REAL HARD LOOK AT THESE ALTERNATIVES COUNCILWOMAN TI OWNED UTILITIES, OR CO-OPS? >> LET ME START BY SAYING WE'RE AGNOSTIC AS TO THE OWNERSHIP MODEL FOR HAWAIIAN ELECTRIC. WE JUST HAVE TO BE BECAUSE IF P SOMEBODY ACTUALLY PUTS IT TOGETHER IN A CO-OP IS PRESENTED TO THE PUBLIC UTILITIES COMMISSION FOR CONSIDERATION, THE CONSUMER ADVOCATE HAS TO TAKE AN INDEPENDENT LOOK AT THAT AND WE HAVE TO CONSIDER THE SAME WAY WE'RE CONSIDERING THE MERGER BETWEEN NEXTERA AND HAWAIIAN ELECTRIC.

YOU KNOW, I THINK THIS DISCUSSION ABOUT A CO-OP AND MUNICIPALITY COMING UP NOW JUST IS A SIGN, IT'S A SYMPTOM OF THE DISTRUST, PUBLIC HAS OVER HAWAIIAN ELECTRIC. ALSO, DISTRUST FOR NEXTERA. BUT PEOPLE NEED TO BE REALISTIC ABOUT WHAT A CO-OP MEANS AND WHAT A MUNICIPAL-OWNED UTILITY REALLY MEANS. IT DOESN'T NECESSARILY MEAN LOWER RATES. THAT'S WHAT HAPPENED AT KIUC. RATES WENT DOWN WHEN KIUC BOUGHT CITIZENS ELECTRIC FROM KAUAI. RATES STAYED THE SAME. HAVEN'T GONE DOWN UNTIL RECENTLY. SAME WITH MUNICIPALITY. YOU HAVE TO LOOK AT THE EXPERIENCE THAT BOLDER IS GOING THROUGH RIGHT NOW TRYING TO BUY OUT THE ELECTRIC UTILITY IN THE CITY OF BOULDER. IT'S BEEN FIVE YEARS AND THEY'VE SPENT OVER $5 MILLION AND THEY'RE NO CLOSER TO HAVING THAT APPROVED. >>DARYL: SO LET ME MOVE ON NOW BECAUSE I'M GETTING A NUMBER OF CALLS.

WE HAVE, I'VE NEVER SEEN QUITE SO MANY CARDS HERE. >> ONE SENTENCE. >> ONE SENTENCE. >> I THINK FOLKS LOOK AT THIS BECAUSE THEY LOOK AT THE EXAMPLE EXISTING NEXTERA DEAL — EXISTING NEXT DEAL ON THE TABLE AND THEY WANT TO KNOW WHAT'S THE BEST OPTION OUT THERE THAT WOULD SAVE THE MOST WITHOUT SHAREHOLDER PROFITS YOU WOULD SAVE FOUR TIMES AS MUCH AS WHAT NEXTERA IS PUTTING ON THE TABLE. >>DARYL: PERFECT SEGUE FOR THIS PROGRAM. PROGRAM TONIGHT HASN'T DONE ENOUGH TO TALK ABOUT CONSUMERS. ONLY ABOUT HOW MUCH MONEY THIS WILL COST. TALK ABOUT HOW MUCH THIS MERGER WILL DO FOR ME THE CONSUMER. ALAN OR ERIC. >> EITHER ONE YOU HAVE WANT TO TAKE THAT LINE? HOW IS IT GOING TO BE DIFFERENT FOR THE CONSUMER, BETTER? >> I CAN TELL YOU WHERE WE'RE HEADED. IT'S ALL ABOUT TRANSFORMING THE UTILITY.

WE ARE SO FAR AHEAD OF THAT, DIFFICULT FOR PEOPLE TO BELIEVE HERE. WE HAVE BEEN FACED WITH MORE RENEWABLE ENERGY THIS THIS STATE, MORE DISTRIBUTED ENERGY. HAVING TO DEAL WITH THIS IN REAL TIME AND HAVE LEARNED FROM IT. BUT ONE OF THE BIGGEST LESSONS IS THAT OLD BUSINESS MODEL REALLY DOESN'T WORK AND YOU REALLY HAVE TO BE VERY CUSTOMER FOCUSED. SO AMONG THE THINGS WE'RE TALKING ABOUT DAILY, ABOUT READY TO COME OUT WITH THINGS, TIME OF USE RATES TO BE ABLE TO ABSORBING MORE SOLAR ENERGY ON OUR SYSTEM, GIVE A LOWER RATE DURING THE DAY. >>DARYL: I NEED TO INTERRUPT YOU BECAUSE THE QUESTION IS WILL THE MERGER, HOW WILL THE MERGER DO THIS. HOW WILL THE MERGER HELP THE CONSUMERS? >> WELL, ALL OF THESE THINGS WILL BE DONE MORE RAPIDLY. I WENT TO FLORIDA. I SAW WHAT FLORIDA POWER AND LIGHT CAN DO.

WITH THE SMART GRID, WITH THE TECHNOLOGY, PROPRIETARY SOFTWARE THEY ARE. THESE ARE THINGS I WANT FOR OUR SYSTEM WHERE YOU CAN PREDICT OUTAGES BEFORE THEY CAN OCCUR, SCHEDULE THINGS FOR THE CONSUMER THAT DOESN'T OCCUR DURING THE FOOTBALL GAMES. >>DARYL: LET ME ASK JEFFREY ONO. DO YOU THINK IT'S GOING TO BE BETTER FOR THE CONSUMER IF THIS MERGER TAKES PLACE? >> IT COULD BE. ONE OF THE THINGS WE'RE SAYING IS, LET'S TALK DOLLARS FIRST. THEY'RE OFFERING $60 MILLION OVER FOUR YEARS IN CREDITS ON THE RATE ADJUSTMENT MECHANISM. THAT'S A REAL DOLLAR AMOUNT. THEY'RE OFFERING A $10 MILLION INVESTMENT FUND, $2.5 MILLION OVER FOUR YEARS. THAT'S A REAL DOLLAR AMOUNT. BUT THE 400 AND 5 MILLION THEY'RE I CAN WAS TALKING ABOUT, WE CAN'T PUT A VALUE ON THAT. THE REASON IS IT'S CONDITIONED ON THE PUBLIC UTILITIES NOT DOING CERTAIN THINGS NOT TOUCHING ENERGY COST ADJUSTMENT CLAUSE, NOT CHANGING ADJUSTMENT MECHANISM AGAIN, NOT ALLOWING HECO TO HAVE THEIR ABOVE, WHAT'S CALLED ABOVE RAM CAP ADJUSTMENT.

>>DARYL: I'M GETTING CONFUSED. >> IF I MAY. >>DARYL: BRIEFLY AS YOU CAN. >> TO TRY TO PUT IT IN SIMPLEST TERMS, JEFF, IF I MAY. >> THANK YOU. >> I THINK WHAT HE'S SAYING IS THE MERGER WILL OFFER SAVINGS FOR CUSTOMER. THE QUESTION IS WHETHER THEY'RE BIG ENOUGH AND CERTAIN ENOUGH. I WOULD ALSO LIKE TO SAY REMIND FOLKS OF OUR TRACK RECORD IN FLORIDA. THERE ARE 55 UTILITIES IN THE STATE. 50 OF THEM ARE MUNICIPAL AND COOPERATIVE UTILITIES. OUR CUSTOMERS PAID IN THE LOW RATES IN SIX YEARS AND OUR TRACK RECORD OF OFFERING LOWER COST FOR CUSTOMERS. >>DARYL: HOW WILL PUBLIC BE HARMED IF NEXTERA IS NOT APPROVED AND NOT REPLACED WITH SOMETHING ELSE. WHAT IS THE SITUATION GOING TO BE? ERIC GLEASON, MAYBE 30 SECONDS. >> WELL, YOU KNOW, I THINK WHAT — I DON'T WANT PUT WORDS IN ALAN'S MOUTH. WHAT HE SAYS, AND AGREE WITH, TOGETHER WITH US, WE CAN DO IT CHEAPER, WE CAN DO IT FASTER AND I THINK WE CAN ENSURE THERE IS THE ACCESS TO CAPITAL THAT HAWAIIAN ELECTRIC NEEDS TO ASSURE THIS TRANSFORMATION TO 100% RENEWABLE.

>>DARYL: CHRIS LEE, 10 SECONDS. >> THERE'S A REAL RISK HERE AND PUSH BACK WHAT ERIC JUST SHARED THAT ULTIMATELY, THEY'RE RELYING ON NUCLEAR AND OTHER THINGS THAT REALLIANT ARE A COMPARISON. NEXTERA JUST LOST $4.2 MILLION BECAUSE THEY MADE A BAD INVESTMENT IN LNG BECAUSE IT DIDN'T PENCIL OUT. SOME OF THE RISKS THAT NEED TO BE WEIGHED. >>DARYL: NEXT WEEK, FEDERAL REVIEW FOUND THAT HAWAI'I MUST IMPROVE SPECIAL EDUCATION SERVICES. 180,000 PUBLIC SCHOOL STUDENT STUDENTS. WHAT IS THE DEPARTMENT OF EDUCATION DOING TO HELP STUDENTS ACHIEVER AT THE SAME LEVEL AS THEIR PEERS. HOW CAN SPECIAL EDUCATION SERVICES BOOST ACHIEVEMENT FOR STUDENTS WITH DISABILITIES? NEXT TIME ON INSIGHTS ON PBS HAWAII. I'M DARYL HUFF. A HUI HO.

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